Alveolar formation requires coordinated movement and interaction between alveolar epithelial cells, mesenchymal myofibroblasts, and endothelial cells/pericytes to produce secondary septa. These processes rely on the acquisition of distinct cellular properties to enable ligand secretion for cell-cell signaling and initiate morphogenesis through cellular contraction, cell migration, and cell shape change. In this study, we showed that mitochondrial activity and distribution play a key role in bestowing cellular functions on both alveolar epithelial cells and mesenchymal myofibroblasts for generating secondary septa to form alveoli in mice. These results suggest that mitochondrial function is tightly regulated to empower cellular machineries in a spatially specific manner. Indeed, such regulation via mitochondria is required for secretion of ligands, such as platelet-derived growth factor, from alveolar epithelial cells to influence myofibroblast proliferation and contraction/migration. Moreover, mitochondrial function enables myofibroblast contraction/migration during alveolar formation. Together, these findings yield novel mechanistic insights into how mitochondria regulate pivotal steps of alveologenesis. They highlight selective utilization of energy in cells and diverse energy demands in different cellular processes during development. Our work serves as a paradigm for studying how mitochondria control tissue patterning.